CHFC 2018 Annual Report

CONSOLIDATED FINANCIAL HIGHLIGHTS Chemical Financial Corporation (Corporation), headquartered in Detroit, Michigan, is a financial holding company which operates through one commercial banking subsidiary, Chemical Bank. We are the largest banking company headquartered and operating branch offices in Michigan with $21.50 billion in total assets. Chemical Bank, provides a full range of traditional banking and fiduciary products and services including commercial, consumer and mortgage banking services; wealth and investment management services; treasury management services; and other financial products and services. Chemical Bank provides these services through 212 banking offices located in Michigan, Ohio and Northern Indiana as of December 31, 2018. The Corporation’s common stock is traded on The NASDAQ Stock Market® under the symbol CHFC. A summary of the Corporation’s consolidated financial highlights for the three years ended December 31, 2018 follows: 2018 2017 2016 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NET INCOME $284,020 $149,523 $108,032 PER COMMON SHARE DATA Net income per common share — diluted $3.94 $2.08 $2.17 Net income, excluding significant items, per common share — diluted (1) 3.94 3.06 2.88 Cash dividends declared and paid 1.24 1.10 1.06 Book value at December 31 39.69 37.48 36.57 Market price at December 31 36.61 53.47 54.17 BALANCE SHEET DATA (DECEMBER 31) Total assets $21,498,341 $19,280,873 $17,355,179 Total loans 15,269,779 14,155,267 12,990,779 Total deposits 15,593,282 13,642,803 12,873,122 Total shareholders’ equity 2,836,260 2,668,749 2,581,526 Shareholders’ equity as a percentage of total assets 13.2% 13.8% 14.9% Tangible shareholders’ equity as a percentage of total assets (1) 8.3 8.3 8.8 PERFORMANCE RATIOS Return on average assets 1.41% 0.81% 0.90% Return on average tangible shareholders’ equity (1) 17.9 10.2 11.2 Net interest margin 3.48 3.40 3.51 Net interest margin (FTE) (1) 3.53 3.48 3.60 Efficiency ratio - GAAP 54.3 60.1 67.2 Efficiency ratio - adjusted non-GAAP (1) 51.5 51.9 54.4 Dividend payout ratio 31.5 52.9 48.8 ASSET QUALITY MEASURES Net loan charge-offs $12,653 $9,681 $9,935 Net loan charge-offs to average total loans 0.09% 0.07% 0.11% Total nonperforming loans (NPLs) $85,433 $63,095 $44,334 NPLs as a percentage of total loans 0.56% 0.45% 0.34% Total nonperforming assets (NPAs) $91,689 $71,902 $61,521 NPAs as a percentage of total assets 0.43% 0.37% 0.35% (1) Denotes a non-GAAP Financial Measure. These non-GAAP measures are supplemental in nature and should not be considered in isolation or as alternatives to GAAP measures. Reconciliations of non-GAAP financial information to the closest corresponding GAAP measure are included under the caption “Non-GAAP Financial Measures” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our enclosed Annual Report on Form 10-K for the year ended December 31, 2018.